DoD's $46.7M research contract with American Registry of Pathology shows concerning value and limited competition

Contract Overview

Contract Amount: $46,694,277 ($46.7M)

Contractor: American Registry of Pathology

Awarding Agency: Department of Defense

Start Date: 2015-09-30

End Date: 2018-11-29

Contract Duration: 1,156 days

Daily Burn Rate: $40.4K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST NO FEE

Sector: R&D

Official Description: IGF::OT::IGF

Place of Performance

Location: DOVER AFB, KENT County, DELAWARE, 19902

State: Delaware Government Spending

Plain-Language Summary

Department of Defense obligated $46.7 million to AMERICAN REGISTRY OF PATHOLOGY for work described as: IGF::OT::IGF Key points: 1. The contract's value proposition appears weak given the lack of competition and the nature of the services. 2. Limited competition raises concerns about price discovery and potential overpayment. 3. The contract's duration and cost-plus structure may indicate inherent risks in performance and cost control. 4. Research and Development in Physical, Engineering, and Life Sciences is a broad category, requiring specific context for performance evaluation. 5. The contract's positioning within the broader R&D sector is unclear without more granular service details.

Value Assessment

Rating: concerning

The contract's value is difficult to benchmark due to its sole-source nature and the 'Cost No Fee' pricing structure, which typically covers only direct costs and indirect expenses. Without a competitive bidding process, it's challenging to ascertain if the government received optimal pricing. The lack of a fee suggests the contractor is not incentivized by profit, but this also removes a common benchmark for value. Further analysis would require comparing the specific research outcomes and their market value against the incurred costs.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning there was no open competition. The justification for this approach is not provided in the data, but sole-source awards often occur when only one entity possesses the necessary specialized capabilities or when urgency precludes a competitive process. The absence of multiple bidders means the government did not benefit from price negotiation or a range of technical approaches, potentially leading to higher costs and less innovation.

Taxpayer Impact: Sole-source awards limit the government's ability to secure the best possible price and may result in taxpayers funding a contract without the assurance that competitive market forces were leveraged to achieve value.

Public Impact

The primary beneficiary is likely the Department of Defense, which receives research and development services. The services delivered fall under Research and Development in the Physical, Engineering, and Life Sciences. The geographic impact is primarily linked to the contractor's location in Delaware, though research findings could have broader national implications. Workforce implications are tied to the specialized scientific and research personnel employed by the American Registry of Pathology.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Sole-source award limits price competition and potential for cost savings.
Cost-plus contract type can lead to cost overruns if not closely monitored.
Lack of performance metrics in the provided data makes value assessment difficult.
Research and Development contracts can have uncertain outcomes and timelines.

Positive Signals

Contract awarded to a specialized entity (American Registry of Pathology) potentially possessing unique expertise.
Contract duration of over three years suggests a sustained research effort.
Focus on R&D aligns with strategic government investment in scientific advancement.

Sector Analysis

This contract falls within the Research and Development sector, specifically focusing on physical, engineering, and life sciences. This sector is characterized by innovation, long development cycles, and often high costs. Benchmarking spending in this area is complex, as it depends heavily on the specific scientific domain, the novelty of the research, and the potential for commercialization or strategic application. Government R&D spending is crucial for advancing technology and national security, but requires rigorous oversight to ensure value.

Small Business Impact

The data indicates this contract was not set aside for small businesses, nor does it provide information on subcontracting opportunities. As a sole-source award to a large, established entity, it is unlikely to have direct positive implications for the small business ecosystem. The focus is on specialized research capabilities rather than broad service delivery where small businesses often participate.

Oversight & Accountability

Oversight mechanisms for this contract are not detailed in the provided data. However, as a Department of Defense contract, it would typically fall under the purview of the Department of Defense Inspector General for audits and investigations. Transparency would depend on the public availability of contract performance reports and spending details, which are not fully accessible here. Accountability measures would be tied to the contract's statement of work and deliverables.

Related Government Programs

Department of Defense Research and Development Programs
National Institutes of Health (NIH) Research Grants
National Science Foundation (NSF) Research Funding
Biomedical Research Contracts

Risk Flags

Sole-source award
Cost-plus contract type
Lack of competition
Potential for cost overruns
Uncertain R&D outcomes

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $46.7 million to AMERICAN REGISTRY OF PATHOLOGY. IGF::OT::IGF

Who is the contractor on this award?

The obligated recipient is AMERICAN REGISTRY OF PATHOLOGY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Army).

What is the total obligated amount?

The obligated amount is $46.7 million.

What is the period of performance?

Start: 2015-09-30. End: 2018-11-29.

What is the specific research focus of the American Registry of Pathology under this contract, and how does it align with DoD priorities?

The provided data classifies the contract under NAICS code 541712, 'Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)'. However, it does not specify the exact research focus. The American Registry of Pathology (ARP) is known for its work in pathology, including areas like forensic sciences, disease research, and medical diagnostics. To assess alignment with DoD priorities, one would need to examine the contract's statement of work (SOW) and compare its objectives against current defense research needs, such as advancements in medical readiness, biodefense, or operational health support for military personnel. Without the SOW, this alignment remains speculative.

How does the 'Cost No Fee' (CNF) pricing structure impact the contractor's motivation and the government's oversight requirements?

The 'Cost No Fee' (CNF) pricing structure means the contractor is reimbursed for all allowable costs incurred in performing the contract, but receives no additional profit or fee. This structure is typically used when the contractor is a non-profit organization or when the work is of such a nature that a fee is not appropriate or feasible, such as certain types of research or public service activities. For the contractor, the primary motivation is cost recovery and fulfilling the contractual obligations. For the government, this necessitates rigorous oversight to ensure that all costs claimed are reasonable, allocable, and allowable under the contract terms. The absence of a profit motive means the government cannot rely on market-driven profit expectations to ensure efficiency; instead, it must depend heavily on auditing and monitoring incurred costs.

Given the sole-source nature, what steps could have been taken to ensure fair and reasonable pricing?

When a sole-source award is necessary, agencies typically employ several strategies to ensure fair and reasonable pricing. These can include conducting thorough market research to understand the full scope of available capabilities and potential pricing, obtaining cost and technical data from the contractor, performing detailed cost and price analyses, and negotiating the price rigorously. Independent government cost estimates (IGCEs) are crucial for establishing a baseline. In this case, since the data indicates a 'Cost No Fee' structure, the negotiation would focus on the reasonableness of the proposed costs rather than a fixed price or target profit. Without access to the contract file and negotiation documentation, it's difficult to assess the extent to which these steps were effectively implemented.

What are the potential risks associated with a 'Cost No Fee' contract awarded on a sole-source basis for R&D?

A 'Cost No Fee' contract awarded on a sole-source basis for R&D presents several risks. Firstly, the lack of competition means the government may not be getting the best value or the most innovative solution available. Secondly, the CNF structure removes the profit incentive, potentially reducing the contractor's drive for efficiency and cost control, relying solely on reimbursement of incurred costs. This necessitates robust government oversight to prevent cost creep. Thirdly, R&D projects inherently carry uncertainty regarding outcomes and timelines. When combined with sole-source and CNF terms, the government bears a significant portion of the financial risk without the mitigating factors of competition or performance-based incentives, potentially leading to cost overruns and delayed or unsatisfactory results.

How does the duration of this contract (1156 days) compare to typical R&D contracts in the physical, engineering, and life sciences sector?

A contract duration of 1156 days, approximately 3.17 years, is not uncommon for Research and Development (R&D) contracts, particularly in the physical, engineering, and life sciences. These fields often involve complex, multi-stage research projects that require significant time for experimentation, data analysis, and reporting. Typical R&D contracts can range from a few months for exploratory studies to several years for long-term developmental projects. The duration here suggests a substantial research effort was planned. However, the value of this duration is contingent on the project's scope, milestones, and the actual progress made, which are not detailed in the provided summary data.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Scientific Research and Development Services › Research and Development in the Physical, Engineering, and Life Sciences (except Biotechnology)

Product/Service Code: MEDICAL SERVICES › OTHER MEDICAL SERVICES

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Solicitation ID: W81XWH15R0057

Offers Received: 1

Pricing Type: COST NO FEE (S)

Evaluated Preference: NONE

Contractor Details

Address: 9210 CORPORATE BLVD. SUITE 120, ROCKVILLE, MD, 20850

Business Categories: Category Business, Corporate Entity Tax Exempt, Nonprofit Organization, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $53,612,202

Exercised Options: $53,612,202

Current Obligation: $46,694,277

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: NO

Timeline